Jason and Alex began by saying the main purpose of the show is to help individuals steer clear of toxic advice, prevent them from making great behavioral mistakes, and helping individuals create disciplines and philosophies to think about building wealth. Jason talked about how most advisors do not do tax planning, such as tax loss harvesting in a client’s portfolio, until the end of the year, which may be too late. Many of those advisors have already missed opportunities to save their clients thousands and thousands of dollars over the span of their financial lives.
They pivoted and started talking about the TRUE value that we brought to our clients back in March when we had one of the fastest selloffs in market history. It is hard to quantify in numbers the true value of bringing peace of mind to our clients during periods of economic and market distress. If a client makes one of the greatest behavioral mistakes and sells to cash at a market bottom, this is not a few hundred dollar decision, this could be in the tens, if not hundreds of thousands of dollars compounded range of a decision. They discussed that these feelings/emotions are real and justified during these periods of market uncertainty, and it is our job as advisers to be sounding boards and a voice of reason within the storm.
Alex explained that we are financial coaches that lead our clients to focus on the things that we can control because there are so many aspects of this rapidly changing world that we cannot control. He also talked about the two key areas of our business that are financial planning and investment management, and even though that does not sound interesting, they are both equally important and crucial to our clients achieving financial success. The financial planning is important because it puts everything into perspective and creates a road map for client’s financial goals and objectives. On the other hand, the investment management is the strategic execution of how we invest our client’s hard-earned money, another crucial role in achieving one’s financial goals and getting to a place of peace of mind.Alex and Jason explained that taxes are an aspect of a client’s financial plan that can be controlled to an extent.
They went into greater detail about what tax lost harvesting really is. Tax loss harvesting is when you have a portfolio position that went down temporarily, an example of this would be small cap stocks being down 40% or more back in March, and then you purposely sell that investment and go buy another investment that is not substantially similar to remain in that area of the market because you believe in owning it long term. You can use that loss to offset ordinary income or future/current long/short term gains. They explain how this could save large amounts of tax dollars if executed correctly year in and year out. Alex explained that here at IDA we scan for these opportunities every single day. Even though we do not trade every single day, we are looking for these opportunities regularly. Four major investment companies quantified the value of tax loss harvesting and tax sensitive asset location to be up to potentially 1.5% of additional value directed to client’s pockets. This is a huge deal and is a very important aspect of strategic asset management that is commonly missed by most advisors.
They invite listeners to send their questions to firstname.lastname@example.org or call 877-707-8889.
In this show you will learn about:
- Delivering value through tax planning/execution throughout the year
- Quantifying the value that we bring as a Fiduciary Adviser
- Tax loss harvesting and the strategic, controllable benefits